Overview and Case Study 2: ERPsim Manufacturing (I) EGN 5621 Enterprise Systems Collaboration Fall,...

Overview and Case Study 2:Overview and Case Study 2:ERPsim Manufacturing (I)ERPsim Manufacturing (I)

EGN 5621 Enterprise Systems CollaborationFall, 2011

ObjectiveObjectiveThe objective of the Manufacturing

introductory ERPsim is to provide a quick hands-on experience of an integrated business process through an ERP manufacturing ERPsim, which combines basic operation functions, such as planning, sales, production, procurement, marketing, investment, and financial accounting for learning how to make business strategy and business decisions.

Corporate Roles DesignationCorporate Roles Designation CEO (Team Leader)

◦ Watch financial statement◦ Price market report◦ Check summary sales report◦ Check sales and market data◦ Check inventory Report

Marketing Manager◦ Marketing Expense Planning◦ Price market report◦ Check sales and market data

Sales Manager◦ Change price◦ Check summary sales report◦ Check sales and market data

MM Manager◦ Forecast – create planned indep. Req.◦ MRP run◦ Automatic generation of POs◦ Purchase Order Tracking◦ Check inventory Report

3

Operations in the Operations in the cash-to-cash cyclecash-to-cash cycle

The Virtual Business EnvironmentThe Virtual Business Environment

Simulation of a market

Automation of administrative tasksAutomation of administrative tasks

Simulation of the passing of time

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Data model of the main master Data model of the main master data used in the simulation gamedata used in the simulation game

Definition of master data (1/2)Definition of master data (1/2)

Definition of master data (2/2)Definition of master data (2/2)

List of master data to create for List of master data to create for the simulationthe simulation

Muesli CerealsMuesli Cereals

Raisins

Oats

Strawberries

Wheat

Blueberries

Nuts

Your 6 productsYour 6 products

40% wheat40% oat20% nut1 box1 bag

35% wheat35% oat10% raisin10% nut5% strawberry5% blueberry1 box1 bag

50% wheat50% oat1 box1 bag

40% wheat40% oat20% raisin1 box1 bag

40% wheat40% oat20% strawberry1 box1 bag

40% wheat40% oat20% blueberry1 box1 bag

Data model of product Y$$-F06Data model of product Y$$-F06

German marketGerman market

NorthDC10: 2 retailers

DC12: 19 retailers

SouthDC10: 7 retailersDC12: 23 retailers

WestDC10: 3 retailers

DC12: 17 retailers

Muesli Muesli Manufacturing Manufacturing Association Label Association Label RegulationRegulation

Input CostInput Cost

at low seasonal priceat low seasonal price

Number of stores by Number of stores by

geographical areageographical area

DC10DC10

HypermarketsHypermarketsBuy only large boxes (1 kg)Payment delay of 20 stepsMore sensitive to priceLess sensitive to advertisingWill have a stronger preference for 3

particular products during the simulation

DC12DC12

Grocery chainsGrocery chainsBuy small boxes (0.5 kg) and large boxes

(1 kg)

Payment delay of 10 to 15 steps

Will have a stronger preference for 4 particular products during the simulation

DC14 Independent grocersDC14 Independent grocers

(will be used in Extension ERPsim)(will be used in Extension ERPsim)

Only buy small boxes (0.5 kg)Less price sensitiveSensitive to advertisingPayment delay of 5 to 15 stepsWill have a stronger preference for 3

particular products during the simulation

Number of retailers per Number of retailers per

LocationsLocations

Risk premium on credit Risk premium on credit ratingsratings

Production improvementsProduction improvements(will be used in extension ERPsim)(will be used in extension ERPsim)

Warehousing costWarehousing costautomatically chargedautomatically charged

Each team has 3 warehouse storage areas:◦Finished product - space for 250,000 boxes◦Raw materials - space for 250,000 kg◦Packaging - space for 1,000,000 boxes and

space for 1,000,000 bagsAdditional warehouse space can be rented:

◦100,000 boxes (or part thereof), @ € 200/step (less than € 0.01 per box per step)

◦100,000 kg (or part thereof), @ € 350/step (more expensive because it's raw food product)

◦100,000 boxes AND/OR bags (or part thereof), @ € 50 step

Fixed costs per weekFixed costs per week

Review of the major rulesReview of the major rulesYou may not change the recipe of a product

if you are still carrying inventoryCustomers preferences do not change

throughout the game, hence you may learn from their past behavior

The company displaying the highest shareholder’s equity at the end of the simulation wins the game

You must behave ethically at all timesThe end of game inventory will be value at

cost price in the final balance sheet. Therefore, you shouldn’t sell under cost at any time during the game.

Elements of a winning Elements of a winning strategystrategyUse the ERP system efficientlyDo not run out of stockDelays, production capacities and

liquidity constraints are important elements of the game

Exploration and exploitationTeam organization is more important

than you think

Game layoutGame layout

30 steps30 min

30 steps30 min

30 steps30 min

Rules of the gameRules of the game

• Each round will be of 30 steps (approx 1 min per step)• End-of-round inventory is carried over to the next round• You can sell a product only if you have it in stock• You compete against the other teams and importers• Your objective is to maximize profit

Participant’s job aidParticipant’s job aid

Let’s get started!Let’s get started!• Create your team : • Max 4 persons : User 1 to User 4• Up to 26 company : A to Z

• Log in using user name and passwords giving by your teacher

Login informationLogin information

Client 265

Login : intro_$#$ = Team, # = User 1 to User 4

Password: ERPSIM

SAP Menu & NavigationSAP Menu & Navigation

Introductory Game: Introductory Game: Round 1Round 1

30 steps30 min

Cost, inventory & initial pricingCost, inventory & initial pricing

Material $$-F01 $$-F02 $$-F03 $$-F04 $$-F05 $$-F06

Name

Nut Muesli1.0 kg.

BlueberryMuesli1.0 kg.

StrawberryMuesli1.0 kg.

Raisin Muesli1.0 kg.

OriginalMuesli1.0 kg.

Mixed FruitMuesli1.0 kg.

Raw material Cost € 1.53 € 1.97 € 1.97 € 1.38 € 1.36 € 1.76

Standard cost € 2.48 € 3.09 € 3.09 € 2.50 € 2.65 € 2.89

Initial price 1012

€ 4.24€ 4.49

€ 5.18€ 5.43

€ 5.18€ 5.43

€ 3.92€ 4.17

€ 3.87€ 4.12

€ 4.75€ 5.00

Initial stock 100,000 100,000 100,000 100,000 100,000 100,000

The Introductory game:The Introductory game:Round 1 (30 steps- days)Round 1 (30 steps- days)

• You need to maintain the price of your 6 products and invest in marketing.

• What do you need to know in order to make that decision ?• You need to know how to : • Maintain price list• See available stock• Monitor sales orders• Monitor competitors• Monitor your profit !

Participant’s job aid & MenuParticipant’s job aid & Menu

Check product costingCheck product costing

Maintain Prices for DC 10 & 12Maintain Prices for DC 10 & 12

Marketing expenseMarketing expense

Stock in material overviewStock in material overview

Check sales summary reportCheck sales summary report

Check sales order reportCheck sales order report

Check market reportCheck market report

Check financial statementsCheck financial statements

The Introductory game:The Introductory game:Round 1 (30 steps – 30 days)Round 1 (30 steps – 30 days)

We start the simulator for 30 steps

Introductory game: Introductory game: Round 2Round 2

30 steps30 min

Participant’s job aid & MenuParticipant’s job aid & Menu

Release production orderRelease production order

Check production scheduleCheck production schedule

Parameters of the gameParameters of the game

The Introductory game:The Introductory game:Round 2 (30 steps - days)Round 2 (30 steps - days)

We start the simulator for 30 steps

Introductory game: Introductory game: Round 3Round 3

30 steps30 min

Participant’s job aid & MenuParticipant’s job aid & Menu

Raw material cost per PORaw material cost per PO

ForecastingForecasting

Execute MRPExecute MRP

After the MRP runAfter the MRP run

Convert purchase requisitions into Convert purchase requisitions into purchase orderspurchase orders

The Introductory game:The Introductory game:Round 3 (30 steps – 30 days)Round 3 (30 steps – 30 days)

We start the simulator for the last 30 steps

Track purchase ordersTrack purchase orders

Profit center analysisProfit center analysis

Liquidity planningLiquidity planning